An alternative strategy to consider rather than pausing your repayments

We are in an ever changing environment with covid-19 and I have received a lot of emails asking whether it was a good idea to put your repayments on hold with your bank, just in case things turn sour. My advice is that you should only be pausing your repayments if you have exhausted all options. The key thing to remember is that right now, the banks aren’t really pausing your repayments, all they’re doing is capitalising your interest during the time you want to put things on hold.

This means that when you come off your repayment holiday, you will be behind in your mortgage repayments, which could affect your ability to obtain finance in the future.

As such, if you’re not yet in dire straits with your job, we recommend that you consider strongly two options:

1. Make sure you are on the most competitive rate possible. We have had two very quick rate drops recently and traditionally lenders are slow to reduce rates for existing customers. If you are not sure whether the rate you are on is competitive with the rest of the market, please click here to fill out a simple online form where we can complete a comparison for you.

2. Consider getting a cash out loan now as your safety buffer. Rather than pausing your repayments, funding your current repayments via an additional facility will mean that when things are okay again, you can focus on paying down any additional debt you have accumulated. However, the key difference is rather than trying to catch up from an arrears position, you can pay down the additional money at your own pace. In addition, if you want to apply for future debt, for instance to purchase additional property, you will be able to do so as you are not behind on your current mortgage.

Remember, I am always here to help so if you would like a review of your existing situation please click here or get in contact with me using the contact methods below. ]